Donald Kirk
, ContributorI cover business and economy in South and North Korea.Opinions expressed by Forbes Contributors are their own.

The shutdown of the Kaesong Industrial Complex just above the line dividing North from South Korea marks the final ending of an era of failed hopes for North-South reconciliation as the confrontation goes on a downward spiral from which there appears little prospect of recovery.

You can’t blame President Park Geun-Hye for not wanting to keep pumping more than $150 million a year into North Korea for the privilege of 124 small and medium-sized South Korean companies to operate there considering how many more millions the North is spending on its nuclear and missile programs.

PAJU, SOUTH KOREA - FEBRUARY 11: A vehicle arriving from the Kaesong joint industrial complex in North Korea at the inter-Korean transit office on February 11, 2016 in Paju, South Korea. South Korea announced on February 10, 2016 that the country would close an industrial complex jointly ran with North Korea, as the strongest response for North's recent nuclear test and rocket launch. (Photo by Chung Sung-Jun/Getty Images)

On the other hand, you have to wonder if the money was all wasted if the zone, beside the “truce village” of Panmunjom about 40 miles north of Seoul, served as a portal for working relationships between about 500 South Korean company managers and technicians and 54,000 North Korean workers. And you also wonder what it would take to make a fresh beginning in rapprochement – or if the North-South standoff will inevitably worsen to the point of armed conflict.

Assuming there’s not the slightest chance North Korea’s leader Kim Jong-Un will give up or even scale down his program for developing nuclear warheads and the rockets to carry them to the U.S. west coast, dialogue at this stage would appear unlikely.

Kim is riding high on the success of launching another small satellite into space a month after North Korea’s fourth nuclear test. He’s also solidifying his personal power against any sign of disagreement, as seen most recently in reports of the execution of his chief of staff, General Ri Yong-gil. Ri is believed to have been the latest victim of an ongoing purge that has taken scores of lives. Kim’s uncle-in-law, Jang Song-Thaek, once regarded as the North’s second most powerful leader, and Hyon Yong-Chol, defense minister, rank as the most prominent victims.

It would be wishful thinking to believe the current stoppage at Kaesong will turn out to be a mere “suspension” that will end up with work resuming there as happened in 2013 when the North slammed the door on the complex for four months as punishment for South Korea and U.S. military exercises.

With the annual war games coming up again in the Spring, how much chance is there of South Korean companies returning in the near future? The South is now asking the North Koreans to let the companies pull out production equipment – something they didn’t request before – while demanding courtesy and cooperation in the exodus of South Korean personnel.

How willing is the North going to be about the return of equipment for companies that produced light industrial products often at a loss covered by South Korean government guarantees? Theoretically South Korean companies benefited from cheap North Korean labor, but North Korean authorities profited immensely by keeping most of the $100 million a year poured in for workers’ wages plus millions more for leasing and renting property and facilities inside the zone.

The biggest loser is Hyundai Asan, the Hyundai group company that operated both the Kaesong complex and the Mount Keumkang tourist zone, looming above the North-South line near the east coast on the other side of the peninsula. President Park’s predecessor, Lee Myung-bak, shut down tourist visits to Keumkang from South Korea in 2008 after a North Korean soldier shot and killed a South Korean woman seen walking outside the tour route to gaze at the sunrise over the sea.

Hyundai Asan, and
Hyundai Engineering and Construction, also absorbed huge losses from construction of railroads into both zones. South Korea freight trains ran empty once a day into the Kaesong complex after the line opened amid much fanfare, but North Korea ordered them to stop several years ago. Trains have never run on the line into the Keumkang zone.

The permanent shutdown of the Kaesong complex would be even more disappointing than that of Keumkang since the complex had survived the steady breakdown of some semblance of rapport established by South Korea’s President Kim Dae-Jung and North Korea’s leader Kim Jong-Il at their summit in Pyongyang in June 2000. Although Kim Dae-Jung’s “Sunshine policy” never worked, the two Koreas held nearly 20 reunions of thousands of families divided by the Korean War, most recently in September.

The zone remained open despite the deaths of 50 South Koreans in 2010, including 46 sailors aboard a South Korean navy corvette that was sunk in the Yellow or West Sea by a North Korean mini-submarine and two marines and two civilian contractors killed by North Korean shelling of an island off the North’s southwest coast.

With Kim Dae-Jung and Kim Jong-Il both dead and gone, North and South are pursuing policies that appear more confrontational than during the decade when DJ and his successor, Roh Moo-Hyun, also deceased, encouraged North-South contacts. Kim Jong-un, anxious to swing his considerable weight around, has stepped up the rhetoric – and the executions of those perceived as disagreeing with him – in an escalation of tensions from which there appears to be no relief.

Nor is China, North Korea’s only real ally, the source of all its fuel and half its food, helping much if at all to stop Kim Jong-Un from developing and testing ever more nukes and missiles. China, along with Russia, exporting natural gas and other products to the North, has strongly opposed strengthening sanctions in the UN Security Council while berating South Korea for considering U.S. entreaties to purchase THAAD – terminal high altitude area defense – systems for knocking out high-flying North Korean rockets.

China’s policy means that a bill passed by the U.S. Senate authorizing seemingly tough measures to enforce sanctions is more or less meaningless. China, in fact, has aided and abetted North Korea’s efforts to get around sanctions by setting up companies as covers for the North Koreans and pouring in much needed products through free market contacts across the Yalu River border. Chinese banks and financial firms serve as conduits for North Korea transactions.

To read more of my commentaries on Asia news, click on www.donaldkirk.com, and the details of my books are available here.